Power Lunch

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Power Lunch

Analysts Question Timing Of Paulson's China Grievance

The Bush administration on Friday filed a complaint with the World Trade Organization, accusing China of improperly subsidizing its own firms. "Power Lunch" heard from two experts on international trade, who debated whether the filing was smart, hard-edged economic brinkmanship -- or a savvy political move to mollify Congressional Democrats and others who demand White House action on vanishing U.S. manufacturing jobs.

CNBC's Bill Griffeth wondered whether Friday's act of protest over infamous Chinese trade practices was not akin to the cynical Inspector Reynault in "Casablanca" (1942), who was "shocked, shocked!" to find gambling -- in his favorite casino.

Grant Aldonas, the Scholl Chair for International Business at the Center for Strategic and International Studies, dismissed the skeptics. Aldonas noted that while China is a "great market" for U.S. exporters, Beijing nonetheless engages in "certain economic practices" that produce "negative effects" in both nations. He declares that Treasury Secretary Henry "Hank" Paulson was right to file the WTO grievance, which may help to rectify "serious distortions" woven into Chinese trade habits.

Don Straszheim, vice chairman of Roth Capital Partners, agreed that Paulson did the "right kind of thing" with the WTO filing, citing the "very messy" difference between American and Chinese operating rules, and points to the core of state-owned firms that still enjoy subsidy largesse from Beijing. But he maintains that however well meant, the WTO protest will not have any palpable effects by its timing target, the end of the Bush administration. The mills of the gods grind slowly.

China Trade Wars